Q. Do I need a written contract, and if so, does it need to be in a particular form?

A. For domestic building work (in this case building or renovating a house) over $3,300 there must be a written contract.  The written contract must comply with the requirements of the Queensland Building & Construction Commission Act 1991.  The Queensland Building and Construction Commission (QBCC) provides a contract template that complies with the Act.  As well, the Housing Industry Association (HIA) and Master Builders Qld also provide templates of contracts that complies with the Act.  However, it is not mandatory to use these forms and some builders may have their own formal contract. 

Q.  Is it advisable to obtain legal advice before signing a building contract?

A. If the building contract is not a QBCC, HIA or Master Builders Qld, it may be doubtful whether the builder’s contract does specifically comply with the requirements of the Act.  Even if it is a QBCC, HIA or Master Builders Qld contract form, there are a number of matters contained within the contract which may not be easily understood and there are parts to be completed by you as the owner to fill and complete which is not necessarily straightforward (see below).  It is therefore advisable to seek legal assistance in considering the contract and assistance in providing your information as required by the contract. 

Q.  What are the important things to consider for the contract before signing?

A.  First, if the contract is more than $3,300 you should ensure that the builder has a QBCC license to do the work that he is contracted for.  The advantage of having a licensed builder is that they ensure that insurance with the QBCC is taken out covering the Queensland Home Warranty Scheme.  The Act itself provides for statutory duties and warranties implied in every domestic building contract, but if the contract is not a licensed QBCC contractor who does not have the required insurance, the chances of recovering for any damages for rectification may be difficult to pursue successfully. 

Q.  Is there a cooling off period?

A.  Yes, the Act allows for a cooling off period in which you may withdraw from the contract within 5 business days of the day you received copies of both the signed contract (including any plans and specifications) and the consumer building guide which must be provided with all domestic building contracts over $3,300.   Please note however there is a cost for homeowners in withdrawing, generally $100 plus any out-of-pocket expenses reasonably incurred by the contractor up to the time of withdrawal.  Further, you must advise the contractor in writing specifically that you are withdrawing under the cooling off provisions under the Act.  Legal assistance in this regard would be advisable to ensure that it is properly done. 

Disputes During the Contract

Q.  The builder is asking for more money and payment than specified in the contract due to variations in material prices and variations in the work that was to be done.  Can the builder rightfully claim these?

A.  Changes in the costs of materials or changes in work that was to be done either by the builder or by you are well known as variations.  Variation disputes are quite common.  This is because whilst the contract provides that variations must be provided in writing and agreed within a timeframe, some builders notoriously do not keep up with the necessary “paperwork” in providing the written variations.  It is important for the owner to ensure that all variations are put into writing and agreed upon.  If disputed, then they can be referred to the QBCC for dispute resolution.  This may take some time and preferably resolved by negotiation.  If there has not been a written variation provided, then the builder is not entitled to the variation and can then be subject to a dispute to be referred to the QBCC.  We at RMO Law can assist in these cases.  

Q.  The date for practical completion stated in the contract is long past, can I claim liquidated damages?

A. The date for practical completion can be extended by the builder providing a written extension of time request to you, the owner, which you must not unreasonably reject.  You may wish to seek legal advice in relation to this. 

If the extension of time in writing was not provided, then the date for practical completion has not been extended under the contract and thus the builder will be in breach.  A claim for liquidated damages is set at a rate specified in the contract.  If no figure is put into the liquidated damages clause, there is no default provision and that is usually $50.00.

It is important to note that this default figure may not be a true estimate of your loss if there is a delay in practical completion due to extended interest payments on loans or if you are renting while the house is being built- the extra rent.  It is therefore important before entering into the contract to seek legal advice concerning the liquidated damages clause that what is inserted, to ensure there is adequate compensation for what your loss will be if there is an over run in time to practical completion.

Q. The builder is not complying with terms of the contract. Can I terminate the contract and get another builder?

A. There must be particular steps to take before the contract can be terminated. If the contract is terminated when legally you cannot, you are at risk of being sued for damages, which may well be very substantial. It is critically important to obtain advice on what steps to take and if you are entitled to take them. We at RMO law with our experienced litigators can advise you on this path.  

Q.  What is the best means of trying to avoid disputes under the contract?

A.  In short, the best advice is to ensure that variations are in writing agreed to and if the builder is saying that they are delayed in doing the work for whatever reason that you ensure that a written extension of time request is provided by the builder and the extension of time process is followed.  If variations and extensions of time in other matters are discussed in writing and agreed, this of course is the best means to avoid disputes.  Accordingly, it is advisable to be vigilant and communicate regularly with the builder. 

Need Help?

At RMO Law, we understand the complexities of building and renovation contracts. Whether you’re reviewing a contract, facing a dispute, or seeking advice before signing, our experienced team is here to help.

📞 Call us: 1800 652 969
📧 Email: mail@rmolaw.com.au
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We service clients across Queensland from our offices in Brisbane, Beenleigh, Cleveland, Jimboomba, and the Gold Coast. Let us help you protect your biggest investment.

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This article is for your information and interest only. It is not intended to be comprehensive, and it does not constitute and must not be relied on as legal advice. You must seek specific advice tailored to your circumstances.

Peter Kronberg
Special Counsel